World Bank ECA PREM Department Brochure

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The World Bank’s Poverty Reduction and Economic Management Department (ECSPE) in the Europe and Central Asia (ECA) Region handles the region’s work on economic policy, public sector management and governance, social inclusion, and access to equal economic opportunities. The ECA region comprises 30 highly diverse client countries, with a total population of nearly 500 million people. The region spans European Union (EU) member states and accession countries; middle-income countries in the Commonwealth of Independent States and the Western Balkans; resource-rich countries such as Russia, Azerbaijan, and Kazakhstan; and poor and fragile states such as Tajikistan and Kyrgyzstan. Though ten of our clients have joined the EU, most continue to remain active knowledge-sharing partners and/or recipients of lending services.

THE CHALLENGE Despite the significant diversity in ECA, policy makers in our

ECA clients are cutting social spending as part of fiscal con-

the global economic crisis. The crisis has unveiled key short-

coverage and targeting of this spending to ensure adequate

client countries face some common challenges in the wake of comings of the European growth model, which are putting

pressure on the region’s global competitiveness. These include

solidation efforts, the immediate challenge is to improve the safety nets for poor and vulnerable people.

business regulations, eroding labor force skills, sluggish pro-

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challenges center around three common themes:

remains the most energy-intensive region in the world.

weak fiscal positions, strained financial sectors, cumbersome ductivity, and aging infrastructure. Policy responses to these

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Reforms for Improved Competitiveness These reforms include restoring the health of public

finances, stabilizing the financial sector, improving the business climate, enhancing governance, and investing in infrastructure and education.

2

Energy Efficiency and Climate Action for Sustainable Growth

Despite much progress in the past decade, ECA

Several countries in the region have defined energy efficiency strategies, targets, and/or reforms, in many cases in line with EU accession criteria. Analytical work is underway to better

understand options for mitigating the effects of climate change and encouraging greener growth.

Social Sector Reforms for Inclusive Growth

The ECA region is home to the world’s highest levels of social expenditure. Now that most

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At ECSPE, we help our client governments understand the

We offer our clients a wide array of options for working with

formulate policy responses to address these challenges. Most

development policy operations, investment lending for

challenges posed by the current economic environment and importantly, our big-picture viewpoint allows us to help

integrate various sectoral reforms with a view to improving

competitiveness as well as sustainable and inclusive growth.

us toward these goals, including budget support through

specific projects, analytical and advisory support for reform programs, and fee-based services for clients interested in a knowledge partnership.

Development Policy Operations Development policy operations involve a customized dialogue

third loans were customized to align with the government’s

lenges. This dialogue results in direct budget support provided

slowdown and protect priority programs in education, health,

with the government to comprehensively address reform chal-

stepped-up efforts to mitigate the social cost of the economic

by the World Bank to help implement the agreed-upon reform

and social assistance. Many of ECA’s higher- and middle-

Development Policy Lending program for 2008–2010, totaling

to us for development policy support to address crisis-related

agenda. In Poland, for example, ECSPE has prepared a

income clients, including Latvia and Romania, have turned

€2.975 billion and comprising three loans that aim to acceler-

issues. We also use development policy operations to assist our

matic changes in the external economic environment between

and the Kyrgyz Republic, in tackling their long-term program-

ate Poland’s convergence with EU living standards. After drathe autumn of 2008 and the spring of 2009, the second and

lower- and lower-middle-income clients, such as Tajikistan matic development agendas.

Investment Loans Investment loans finance projects to improve public sector management:

Public financial management, including financial management information systems (FMIS) ECSPE helps governments design public financial manage-

inventory). Some projects in the region are working to develop integrated FMIS solutions to support a broader spectrum of

public financial management functions (including in Albania,

the Kyrgyz Republic, Moldova, the Russian Federation,

Turkey, and Ukraine).

ment reform projects to improve the strategic allocation of

Revenue administration reform

efficiency (to minimize waste and align spending with rev-

tax and customs administration by introducing modern risk

resources (to promote growth and reduce poverty), operational

Collecting revenues more efficiently involves modernizing

enues), and fiscal discipline (to improve the credibility of the

management, shifting to a functional rather than geographic

budget). Many of our current projects focus on developing

organization, customizing work with large taxpayers, and opti-

accounting, and reporting functions, linked with related public

ECSPE has prepared and implemented revenue administration

ment, procurement, human resources and payroll, assets and

higher-income clients (Czech Republic, Croatia), resource-rich

core FMIS solutions to support budget preparation, execution,

financial management systems (tax, customs, debt manage-

mizing human resources and information technology systems.

reform projects across the region, customizing solutions to

countries (Kazakhstan, Russia), middle-income countries

(Ukraine, Armenia), and low-income clients (Tajikistan).

Public administration reform

Administration Reform Project facilitated the consolidation of central public administration bodies around key policy areas.

As a result, the number of ministries was cut from 29 to 24 and the number of government agencies from 16 to 8. The reform

A well-functioning public administration is critical to com-

also helped strengthen the capacity of the ministries’ policy

our client governments assess and improve their institutional

Term Expenditure Framework supported through the parallel

their ministries and agencies, and design and implement civil

of public administration reform projects is flexible and often

petitiveness and socially inclusive growth. At ECSPE, we help

capacity for policy coordination, optimize the functioning of

service reform packages. In Moldova, for example, the Public

units to elaborate priorities and align them with the Medium-

Public Financial Management Project. In general, the design includes civil service reform (as in Armenia and Tajikistan).

Analytical and Advisory Work Analytical and advisory work can either underpin ECSPE’s

analysis, economic policy, urban development, and household

assist our client governments with customized diagnosis of the

a specific policy problem in a timely manner, especially during

development policy and investment lending operations, or

challenges they face and the policy responses best suited to

addressing them.

Growth diagnostics Growth diagnostics help policy makers identify constraints

to long-term sustainable economic growth and design policy

reforms to promote sustainable, equitable, and inclusive

stress testing. Shorter policy notes are ideally suited to solving

crisis and recovery phases.

Public expenditure analysis Public expenditure analysis examines trends in public spend-

ing, benchmarks them against patterns of expenditure in other countries, compares them with performance outcomes, and

provides practical recommendations for increasing efficiency

growth. Country Economic Memoranda (CEMs) include com-

and improving performance. Public expenditure analysis can

long term, and emphasize institutional and structural reforms.

the national or subnational (regional or municipal) level and

or the business environment. Policy Notes and Economic

transport, energy, social protection, agriculture, justice, or

prehensive cross-sectoral perspectives over the medium and

Some CEMs focus on thematic issues such as savings, trade, Updates are shorter variants of CEMs, highly focused and

timely, with more targeted and practical medium-term policy

recommendations in areas such as public expenditure, trade

be customized. For example, the analysis can be conducted at

can focus on specific sectors (such as education, health care,

public administration) where the government is interested in

improving efficiency and results.

Equity and inclusion analysis Analyzing equity, poverty reduction, and economic mobil-

ity can help governments improve the design, implementa-

where the government is interested in maximizing the positive impact of its projects and policies.

tion, and impact of public policies. A better understanding of

Economic analysis of climate change and green growth

policies that generate greater improvements in overall living

Economic analysis of climate change and green growth

vulnerable people. This analysis can focus on a variety of top-

“greening potential” in comparison with other countries. This

the determinants of welfare levels and changes can point to standards within a country, while also benefiting poor and

ics (including mobility and poverty trends; determinants of economic mobility, poverty, or social exclusion; and distri-

butional impacts of economic policies such as tax and public

spending or labor market reform) and deliver products ranging

from issue-specific policy notes to comprehensive assessments.

Diagnostics for access to equal opportunities Diagnostics for access to equal opportunities can identify

differences in access to resources and services among vari-

ous population groups, highlighting trends and inequalities

along specific socioeconomic dimensions. These diagnostics can outline effective mechanisms for the equal inclusion of

men and women in selected government policies, and provide practical recommendations for achieving gender-sensitive

policy outcomes. This type of analysis is a flexible product that

can be customized to focus on specific sectors (such as educa-

tion, health care, social protection, agriculture, or employment)

benchmarks an economy on key aspects of “greenness” and

analysis provides a toolbox of analytical approaches that can

be combined to address the most important issues within the

green growth agenda; fosters an economywide, macroeconomic

approach to a cross-sectoral challenge; and provides practical recommendations for key areas of action that will most

efficiently advance climate change approaches and “greening.”

The analysis is country-specific, focusing on issues that are of interest to the client government and relevant to the specific

economy. It proposes a range of realistic options for short-term, medium-term, and longer-term actions to lower carbon use

or increase the greening of growth, and refers to examples of

relevant experiences and good practices from other countries.

Fee-Based Services The above tools and approaches describe ECSPE’s engagement

In Kazakhstan, ECSPE leads the fee-based Joint

with countries where the World Bank has active lending pro-

Economic Research Program (JERP) to help the government

opment knowledge provider. Some of our higher- and upper-

priority. In 2010/2011, the JERP’s technical assistance and

grams. The World Bank is also recognized as a leading devel-

formulate its reform agenda in the areas of highest national

middle-income clients require development advice but do not

analytical work focused on strengthening public finance man-

fee-based services customized to meet individual client needs.

opment outcomes, mitigating macroeconomic and fiscal risks,

In Romania, ECSPE is engaged in a fee-based program

includes well-regarded high-level brainstorming sessions for

wish to borrow from the Bank. In such cases, ECSPE provides

of functional reviews focusing on public administration in twelve sectors. The reviews have helped guide structural

reforms by providing operational recommendations on strate-

gic management, organizational structure, sector governance, budgeting, and human resources management.

agement and public administration, improving human develand enhancing economic competitiveness. The JERP also

the government on key topics, including state-owned enter-

prise debt management, proactive social safety net programs

and policies to reduce informality, and intergovernmental

fiscal relations.

In the Czech Republic, ECSPE advised the government on the proposed merger of the collection functions of several agencies, including tax, customs, social security administrations, and health

insurance companies.

PE S C E

NER T R A AS P

ECSPE comprises approximately 115 World Bank staff mem-

bers, including economists, applied microeconomists, and public

sector, governance, and gender specialists. Of these, about 45 are located in country offices throughout the ECA region. ECSPE carries out a large and diverse work program of lending and

analytical work. The Department is composed of three macroeconomic groups, two thematic groups on poverty and gender, and a group dedicated to public sector management.

ECSPE teams bring together a wealth of international experi-

ence, sharing good practices from around the world, including

OECD countries and emerging economies. This global expertise is combined with the in-depth country-specific knowledge and

understanding brought by our local economists, who are an inte-

gral part of our teams. This blend of global and local knowledge

enables ECSPE to adapt global experience to the client country’s needs and circumstances, tailoring recommendations to account for the government’s priorities and political realities. We offer impartial, independent advice that policy makers can trust.

The World Bank Europe and Central Asia Region 1818 H Street, NW Washington, DC 20433 USA

tel: (202) 473-1000 fax: (202) 477-6391 www.worldbank.org

For further information, contact Armanda Carcani at acarcani@worldbank.org or (202) 473-0241.